In March 2019 I sold a house for $95000 that we purchased in 1983. Purchase price was $77000.
We made $26000 in capital improvements bringing the basis up to $103000.
The house was placed in a rental situation in May of 1986. I used a 19 year straight line depreciation to claim the depreciation expense. A total of $70500 in depreciation across the 19 years was claimed.
The basis adjusted for depreciation is thus $32500.
We did not live in the house at all after 1986.
The capital gain would seem to be $62500 ($95000 - $32500). Apparently some or all of this gain is subject to ordinary capital gains tax (15% at my income bracket) some of the gain may be subject to a Section 1250 recapture which may be at 25% rate. I am lost when trying to complete the Form 4797 and the Section 1250 worksheet for Schedule D. How is this gain portrayed in Section I and Section III of the form 4797? It seems both sections would show the same gain of $62500. Same question for the Unrecaptured Section 1250 Gain Worksheet which feeds line 19 of Schedule D?
